ZEE would prefer a global company as strategic investor: CEO

Punit Goenka said that talks were initiated when one international player showed interest in ZEE5, the OTT business of ZEEGaurav Laghate | ET Bureau | November 22, 2018, 08:08 IST

(Thinkstock Images)While Subhash Chandra, promoter of Zee Entertainment Enterprises (ZEE), is on a hunt for a global strategic investor for half of the promoters’ stake in the company, his son Punit Goenka, CEO of ZEE, said his first preference would be for international players not yet present in India.

“My first preference is a player who is not yet present in India, preferably from tech/internet background. We don’t need any money for the South Asian business. We need somebody to take us to the global markets,” Goenka told ET.

Last week, ZEE’s promoters announced their decision to sell 50% of their stake (promoters own 41.6% shareholding) in ZEE, the country’s biggest entertainment business by market cap, in a bid to secure large-scale financial backing and compete in a market prone to major technological disruptions.While the sudden announcement surprised the industry, Goenka told ET that he believes now is the time when he will get the “best value” for ZEE.

“If we were to delay this decision for another 18-24 months, it would not be the best from valuation point of view. This is the right time from my perspective for us to get the best value for ZEE and the right partner because of the opportunity it represents to anybody who is not present in this market,” Goenka said.

Goenka refused to share the names of potential players but said currently, global players present in India are Disney, Star (which Disney is in the process of acquiring), Viacom (via JV with TV18), Turner, and Amazon. “Anybody outside of these is a potential partner for us. I am not closing the doors to anyone and I will be stupid to say to anyone that I don’t want you.”

Industry sources said Chinese multinational company Tencent, American telecom giant Comcast and Apple are among the players who have been approached by Goldman Sachs, investment banker for the promoters.

While Apple and Comcast spokespersons declined to comment on the story, an email query sent to Tencent did not elicit response till press time Wednesday.

Incidentally, Tencent is looking at India with great interest. It has invested in Indian fantasy gaming company Dream11 and globally it has interest in internet and related services and products.

Comcast has also been on a lookout for opportunities in India and had made a failed bid to acquire 21st Century Fox from Rupert Murdoch. Apple, meanwhile, is not into OTT or linear TV space and industry experts feel may not be interested in acquiring ZEE stake.

Goenka said that talks were initiated when one international player showed interest in ZEE5, the OTT business of ZEE.

“Earlier, we were looking only for a partner in ZEE5, but the kind of covenants being imposed on the parent company were very, very, limiting. That’s when the bankers also advised us it’s better to bring somebody at the parent level and this party also agreed. That is when we decided that if there is an interest at the parent level, even as a minority shareholder, we should open it up to as many players,” Goenka stated.

He confirmed that at ZEE5, the promoters are open to sell a larger stake, but at the parent level, they won’t sell more than 50%.

“Twenty percent is not a small stake for a large business like this,” Goenka said. “Why would they want to come with only 20% and not ask for more is because they will value our expertise. We are the ones who brought the business to this level today. Being an equal partner with me should be good enough for them to come.”

The genesis of ZEE promoters carrying out the exercise is their aspiration to be a global content company.

Both Chandra and Goenka feel that ZEE understands content and are confident that they can create content for any market, but what they lack is access to those markets and therefore the monetisation of that content for those markets.